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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of Cimpress plc, its wholly owned subsidiaries, entities in which we maintain a controlling financial interest, and those entities in which we have a variable interest and are the primary beneficiary. Intercompany balances and transactions have been eliminated. Investments in entities in which we cannot exercise significant influence, and the related equity securities do not have a readily determinable fair value, are accounted for using the cost method and are included in other assets on the consolidated balance sheets. Investments in entities in which we can either exercise significant influence or, in cases when the entity's structure is that of a limited liability company that maintains a specific ownership account and our investment is more than minor, are recognized as equity method investments. Our equity method investments are included in other assets on the consolidated balance sheets.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We believe our most significant estimates are associated with the ongoing evaluation of the recoverability of our long-lived assets and goodwill, estimated useful lives of assets, share-based compensation, accounting for business combinations, and income taxes and related valuation allowances, among others. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates.

Significant Accounting Policies

Our significant accounting policies are described in Note 2 in our consolidated financial statements included in the Form 10-K for our year ended June 30, 2021.

Error Correction

Revision of Prior Period Financial Statements

During the first quarter of fiscal 2022, we identified an immaterial error related to the presentation of revenue for one-to-one design service arrangements that overstated revenue and cost of revenue for the period from October 1, 2020 through June 30, 2021. On October 1, 2020 we acquired the 99designs business, which is presented as part of our Vista reportable segment, and after acquisition we recognized revenue on a gross basis as if we were the principal to the transactions. In the current quarter, we reconsidered the guidance of ASC 606-10-55-39 and confirmed we are the principal for contest arrangements; however, the one-to-one design service

portion of 99designs revenue is governed by different terms and conditions. We evaluated whether we have control over these services before the design is transferred to the customer, as we leverage a network of third-party designers to fulfill this offering. The pricing and fulfillment responsibility aspects of the one-to-one design arrangements led us to conclude we are an agent to these specific transactions.

We referred to the Codification of SEC Staff Accounting Bulletins (“SAB”) Topics 1.M Materiality and 1.N Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements to assess the materiality of the error. When considering both quantitative and qualitative factors, we determined the impact of the error was not material to our financial statements in any period previously presented. This immaterial error did not have an impact on operating income, nor did it have an impact on our previously presented consolidated balance sheets or consolidated statements of cash flows. This error did not have an impact on the first quarter of fiscal year 2021, which is the comparative period presented in this report, however, we will revise the comparative period results in the Form 10-Q for the second and third quarters of the current fiscal year as well as the Form 10-K for fiscal year 2022. We will revise our previously reported results to present these transactions on a net basis, which will result in a decrease to revenue and cost of revenue of $5,241 and $5,489 for the second and third quarters of fiscal year 2021, respectively, and $16,552 for the fiscal year ended June 30, 2021.

Marketable Securities, Policy

Marketable Securities

We hold certain investments that are classified as held-to-maturity (HTM) as we have the intent and ability to hold them to their maturity dates. Our policy is to invest in the following permitted classes of assets: overnight money market funds invested in U.S. Treasury securities and U.S. government agency securities, U.S Treasury securities-specifically U.S Treasury bills, notes, and bonds, U.S. government agency securities, bank time deposits, commercial paper, corporate notes and bonds, and medium term notes. We generally invest in securities with a maturity of two years or less. As the investments are classified as held-to-maturity they are recorded at amortized cost and interest income is recorded as it is earned within interest expense, net.

We will continue to assess our securities for impairment when the fair value is less than amortized cost to determine if any risk of credit loss exists. As our intent is to hold the securities to maturity, we must assess whether any credit losses related to our investments are recoverable and determine if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. We did not record an allowance for credit losses and we recognized no impairments for these marketable securities during three months ended September 30, 2021 and we had no marketable securities during the three months ended September 30, 2020.

The following is a summary of the net carrying amount, unrealized losses, and fair value of held-to-maturity securities by type and contractual maturity as of September 30, 2021 and June 30, 2021.

			September 30, 2021
			Amortized cost												Unrealized losses						Fair value
Due within one year or less
Commercial paper			$	64,478											$	(13)					$	64,465
Corporate debt securities			87,550												(45)						87,505
Total due within one year or less			152,028												(58)						151,970
Due between one and two years
Corporate debt securities			40,400												(61)						40,339
Total held-to-maturity securities			$	192,428											$	(119)					$	192,309

			June 30, 2021
			Amortized cost												Unrealized losses						Fair value
Due within one year or less
Commercial paper			$	74,463											$	(28)					$	74,435
Corporate debt securities			77,785												(57)						77,728
Total due within one year or less			152,248												(85)						152,163
Due between one and two years
Corporate debt securities			50,713												(90)						50,623
Total held-to-maturity securities			$	202,961											$	(175)					$	202,786

Other Income (expense), net

Other Income (Expense), Net

The following table summarizes the components of other income (expense), net:

			Three Months Ended September 30,
			2021						2020
Gains (losses) on derivatives not designated as hedging instruments (1)			$	13,327					$	(13,495)
Currency-related gains, net (2)			9,350						4,075
Other (losses) gains			(480)						666
Total other income (expense), net			$	22,197					$	(8,754)

_____________________

(1) Primarily relates to both realized and unrealized gains and losses on derivative currency forward and option contracts not designated as hedging instruments, as well as certain interest rate swap contracts that have been de-designated from hedge accounting due to their ineffectiveness.

(2) We have significant non-functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility. The currency-related gains, net are primarily driven by this intercompany activity for the periods presented. In addition, we have certain cross-currency swaps designated as cash flow hedges which hedge the remeasurement of certain intercompany loans; both are presented in the same component above. Unrealized gains related to cross-currency swaps were $3,288 during the three months ended September 30, 2021 while there were unrealized losses of $5,437 during the three months ended September 30, 2020.

Net Income Per Share

Net Income (Loss) Per Share Attributable to Cimpress plc

Basic net income (loss) per share attributable to Cimpress plc is computed by dividing net income (loss) attributable to Cimpress plc by the weighted-average number of ordinary shares outstanding for the respective period. Diluted net income (loss) per share attributable to Cimpress plc gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), warrants, and performance share units ("PSUs"), if the effect of the securities is dilutive using the treasury stock method. Awards with performance or market conditions are included using the treasury stock method only if the conditions would have been met as of the end of the reporting period and their effect is dilutive.

The following table sets forth the reconciliation of the weighted-average number of ordinary shares:

									Three Months Ended September 30,
															2021						2020
Weighted average shares outstanding, basic															26,072,249						25,945,998
Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/warrants (1)															511,564						—
Shares used in computing diluted net income (loss) per share attributable to Cimpress plc															26,583,813						25,945,998
Weighted average anti-dilutive shares excluded from diluted net income (loss) per share attributable to Cimpress plc (2)															18,447						450,089

_____________________

(1) On May 1, 2020, we entered into a financing arrangement with Apollo Global Management, Inc., which included 7-year warrants with a strike price of $60 that have a potentially dilutive impact on our weighted average shares outstanding. For the three months ended September 30, 2021 and 2020, the weighted average dilutive effect of the warrants was 409,561 and 316,257 shares, respectively.

(2) For the three months ended September 30, 2020, we recognized a net loss in the period and therefore presented the impact of share options, RSUs and warrants as being anti-dilutive.

Recently Issued or Adopted Accounting Pronouncements

Recently Issued or Adopted Accounting Pronouncements

Issued Accounting Standards to be Adopted

In May 2021, the FASB issued Accounting Standards Update No. 2021-04 "Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)" (ASU 2021-04), which provides authoritative guidance for the accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The standard is effective for us on July 1, 2022, and early adoption is permitted. We are assessing the impact on our consolidated financial statements.

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